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Firm gives Roseville school district a positive audit report

By: Kevin Bunch | Roseville - Eastpointe Eastsider | Published November 2, 2015

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ROSEVILLE — The fiscal year ending June 30, 2015, was a positive one for Roseville Community Schools, though there are challenges ahead.

Theresa Pollock, the Plante Moran partner in charge of the audit, gave a presentation at the Board of Education’s special meeting Oct. 26 and said that Plante Moran did not find any “material errors” in the financial documents that the school provided.

“Overall, you have financially positive results,” Pollock said. “The health care costs came in a bit better than anticipated, and you had some timing differences for (your energy conservation) bond and expenditures, so you have a favorable budget.”

The district won a governor’s award from the state for its energy conservation efforts through the bond, Executive Director of Finance Diane Kott said. The bond was worth $2.7 million, to be paid back over the next 15 years; with the money, the district made energy-efficiency upgrades to equipment and facilities that the district said should result in a net savings of $2 million during those 15 years.

Much of the talk was about how much money goes in and out of the district’s general fund balance, which essentially is a pool of money that functions as the district’s “savings account.” Funds are used when necessary in the short term, usually with the plan to replace the money later in case of an emergency.

Plante Moran Engagement Manager Chris Geck said that the district had general fund revenues of $55.4 million in last year’s budget — a $5 million increase over 2014, primarily due to the energy conservation bonds. The state supplies the lion’s share of the district’s funding: close to $40 million.

In contrast, Geck said, the district saw $53.6 million in expenditures from the general fund, with 70 percent of that going into direct and indirect instructional costs. The district also saw an increase in how much it contributes to retirement funding, now at 36.31 percent of a payroll dollar.

“It’s a high percentage, but not uncommon for a school district in Michigan, and consistent with what it’s been in the past,” Geck said.

The district needs to dip into its general fund balance to help cover the 2015-16 budget year, though the current outlook is better than what was originally expected when the financial documents were sent out for the audit.

Geck said they initially expected the amount of dollars left in the general fund balance to drop to around $2 million after the district budgeted about $4 million from the general fund to cover the budget gaps.

However, Kott said that due to concessions from the district’s unions — along with unspent energy bond money and lower-than-expected health care costs — the amount the district would need likely is closer to $1.9 million. As a result, more money should be left in the general fund balance by June 30, 2016, than the audit and district initially expected.

While that still involves delving into the general fund balance, there should be enough left to fulfill the state’s new requirement that a district maintain at least 5 percent of its total revenue in the general fund balance, Kott said. Kott said she still needs to analyze the new budgetary changes to be sure what the total impact will be.

“This is a rough estimate based on me adding the new fund balance to current year budget,” she said. “I haven’t done any analysis on salaries and benefits; this is what we came in with, so it’s very rough. The next step is to do an in-depth budget amendment and get everything settled on what position everyone is in.”